Prime Minister Andy Burnham has dropped his strongest hint yet that millions of workers could finally see the frozen income tax personal allowance increase in this year's Budget.
After announcing the return of the £2 cap on bus fares across England, Mr Burnham was asked whether he planned to raise the £12,570 personal allowance – the amount people can earn before paying income tax.
While he stressed there was "no commitment" to make the change, he notably refused to rule it out, fuelling speculation that a long-awaited tax break could be on the table later this year.
What is the HMRC Personal Allowance?
The personal allowance has been frozen at £12,570 since 2021, dragging millions more workers into paying tax as wages have increased – a phenomenon widely known as fiscal drag.
The Prime Minister suggested the issue would be considered alongside other tax decisions in the Government's first Budget.
Speaking during a visit to Bath, Mr Burnham said his decision to reinstate the £2 bus fare cap would "really help people with the cost-of-living pressures they're facing."
He added: "It's there for the whole of 2027, and I think it will put money in people's pockets."
Asked directly whether he planned to increase the personal allowance, Mr Burnham insisted there had been no firm decision.
He said: "I want to answer questions honestly in this job, as I said before."
The Prime Minister added: "I think that's all about trust in politics and doing politics differently."
Explaining his earlier comments about the tax threshold, he said: "It was raised a lot, but I then went on to say, 'But we'll have to look at it at the Budget alongside everything else.' So no commitment, no unfunded promise."
However, it was his next remark that is likely to catch the attention of millions of taxpayers.
"There is no commitment at this point to change, but we will look at that at the Budget."
The comments are likely to fuel expectations that the frozen personal allowance could be reviewed when the Chancellor delivers the Autumn Budget.
Earlier this week, Mr Burnham revealed that increasing the tax-free allowance had repeatedly been raised by voters during the Makerfield by-election campaign, suggesting it is firmly on the Government's radar as it looks for ways to ease the cost of living.
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An increase would allow workers to earn more before paying income tax, potentially reducing tax bills for millions of people. However, ministers have not confirmed whether any change will be made or how it would be funded.
Alongside the tax comments, Mr Burnham confirmed the £2 nationwide bus fare cap will remain in place throughout 2027, reversing the previous Government's decision to raise the maximum fare to £3.
The scheme will be backed by £454 million of Government funding and is expected to save regular bus passengers hundreds of pounds over the course of the year.
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